Understanding the Business Environment - Analysis of Unilever and HSBC

UNDERSTANDING THE
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
UNDERSTANDING THE BUSINESS ENVIRONMENT............................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Brief about organization legal structure along with their purpose and objective, discus about
market structure affects behaviours of business in achieving competitive advantages...............3
A brief about shareholder, stakeholder and stakeholder analysis and process of stakeholder
analysis .......................................................................................................................................5
Discussing three reasons why it is important for Unilever to analyse the business environment
it face. Using the PESTLE identify and explaining 5 important macro environment factors
affecting Unilever. And importance of five forces model with five most critical influence
arises competitive market environment both internationally and nationally...............................7
Key performance indicators to measure organization short term and long term performance
and some recommendation........................................................................................................10
CONCLUSION.............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment indicate external factors and institution that are not control by
business and affects business operation. It includes competition, social, political, technological,
legal factors, customers, suppliers etc. Unilever is the third largest company in consumer goods
and has many manufacturing sites in United Kingdom and company headquartered is in London,
UK. This company offers consumer goods such as food, refreshment, home care products,
personal and beauty care products. Their culture is performance they mainly focus on improving
quality of products and financial performance. Unilever company have good market share which
give them competitive advantages. This report highlights the legal structure of a company such
as public company, charity, public sector, voluntary etc. with their market structure and how this
affects organization in achieving competitive advantages and also includes the terms like
shareholder, stakeholder and stakeholder analysis (Hamilton and Webster, 2018). Also illustrate
about the external factors which affect HSBC business operation such factors are political,
economic, social, technological, environmental and legal factors and importance of macro
factors which influence organization and explain porter five force model is helpful in
competitive advantages. Moreover, it includes key performance indicators which helps
organization in evaluating their short term and long term performance with some
recommendation.
MAIN BODY
Brief about organization legal structure along with their purpose and objective, discus about
market structure affects behaviours of business in achieving competitive advantages.
Organization structure is a system which figure out how activities are applied in order to
accomplish the objective or goal of an organization. These activities involve rules, responsibility
and roles. There are many legal structure such as public company, partnership, public company,
charity, sole trader, voluntary etc. Unilever has legal structure as it operates under single parent
company that is Unilever Plc. This organization is the good consumer goods provider and
Unilever is the biggest company in UK, headquarters in London, UK. Unilever provides
products such as food, water & air purifier, breakfast cereal, tea and coffee, well-being vitamins,
ice cream, soap, personal care and beauty products and many more. Company products are
available in all over 190 countries and there served area is worldwide (Halbert and Ingulli,
2020). There legal structure is public limited company, in UK public company are legally

abbreviated to plc or PLC, and they follow UK company law. Public limited company can be
listed or unlisted on stock exchange but public company have like PLC or plc at the end of the
company name such as Unilever PLC (Bento, 2021). They denote that a company is public by
such suffixes. Public company can take finance from public by Initial public offering (IPO) it
allows company to offer share to investors in London stock exchange before they become
tradable in secondary market. Public company need minimum 2 directors and company should
follow all the rules, regulation and guidelines of UK company law.
Unilever plc is register under Wales and England, which has listed shares on London
stock exchange, New York stock exchange, American depository receipts. Public company can
easily raise capital which helps company to generate good revenue and then profits are share
between shareholders (or a person who invest in this company) as a dividend, and have
advantages such as finance opportunities, spreading risk, easy transfer share, expansion and
growth opportunities. Moreover, it has some disadvantages like difficult to manage, political
interference, expensive to operate and maintain etc. Unilever plc purpose is make sustainable
living common place. There main objective is to helps people in improving their well-being and
health and satisfy their customers. There are mainly four market structure that is monopoly,
perfect competition, oligopoly and monopolistic competition. Unilever plc operate in oligopoly
market structure, in this market usually dominated by small or less number of suppliers. Unilever
plc has a competitive advantage over competitor like proctor and gamble as by its flexible price
and strong distribution channels. Oligopoly affect competition by profit margin that is higher
price would be in competitive market (Velikorossov, 2020). In this market structure marginal
curve never intersect with demand curve therefore it produces less product from the demand so it
is lack allocative efficiency. In this market company have ability and incentive to do innovation
over time. Oligopoly includes price selling ability, maximum revenue, non-price competition,
product differentiation, interdependent of firms and many limitations to new entry. Unilever
have more economic benefits in such market that is come in particular price than they try to
compete with competitors. In this particular market structure there are many barriers for new
entry so company have competitive advantages.